Shareholders approve merger of CVS, Aetna

WOONSOCKET, R.I. — CVS Health has moved a step closer to completing its acquisition of insurer Aetna Inc. after stockholders of both companies overwhelmingly approved the deal. The combination must still pass the scrutiny of regulators, ­however.

More than 98% of CVS shares were voted in favor, while about 97% of Aetna shares voted to approve the deal. The merger is expected to close in the second half of this year.

“The combination of CVS Health and Aetna brings together two complementary businesses with an expanded set of unique capabilities to create a new, community-based open health care model that is easier to use and less expensive for consumers,” said Larry Merlo, president and chief executive officer of CVS, in a statement.

Whether megamergers such as the CVS-Aetna combination or the planned tie-up of Express Scripts Holding Co. with Cigna Corp. will actually deliver lower costs or any other benefit to patients and health care providers remains to be seen, according to some industry observers and analysts. What they will unquestionably accomplish, though, is yet more massive concentration in the health care industry.

If both deals are completed, all three of the nation’s largest pharmacy benefits managers will be linked to three of the largest insurance companies. CVS, Express Scripts and United­Health already process more than 70% of all U.S. ­prescriptions.

The final hurdle for the CVS-Aetna deal will be to convince antitrust enforcers that their combination will in fact result in efficiencies that lower health care costs and produce better outcomes. According to a Bloomberg News report, mergers and acquisitions involving PBMs such as CVS are usually investigated by the Federal Trade Commission, but in this case the Justice Department’s antitrust division, which handles health insurance mergers, is investigating the merger, since it combines a PBM and an insurer.

The wave of consolidation has drawn harsh criticism from the National Community Pharmacists Association. “We’re seeing the growing balkanization of the health care industry, a world in which patients may be forced into a health care kingdom — the CVS-Aetna kingdom, the Cigna-Express Scripts kingdom, the UnitedHealth-OptumRx kingdom — where the borders aren’t porous, and patients are stuck with what they get,” said NCPA chief executive officer B. Douglas Hoey.

Other industry observers question how much cost savings will be left to pass on to consumers after paying for merger-related costs and servicing a ballooning debt load. CVS, for example, reportedly issued about $40 billion of investment-grade debt to finance the acquisition, which would make it the third-largest corporate bond sale on record, if accurate.

In any case, the main impetus for both the CVS-Aetna combination and the Express Scripts-Cigna deal may have been the interests of Amazon.com in moving into the highly dysfunctional U.S. health care field.